Points meaning

Points are digital assets that crypto projects use to incentivize users to participate in certain activities.

What Are Crypto Points?

Cryptocurrency points are tokens given to platform users as a reward for performing certain activities. These points can be earned or awarded via certain actions, transactions, or participation in loyalty programs. 

Crypto projects use this reward system to improve user loyalty and engagement or amplify the anticipation of an airdrop. Points also dissuade airdrop farming – strategically participating in airdrops to maximize rewards received by working around the rules –, which minimizes long-term participation in the project itself.

How Do They Work?

Crypto points function as tokens specifically designed for reward or loyalty programs on a blockchain network. Participants in the programs must first earn the points through activities such as making purchases, actively participating on the platform, or referrals. 

Unlike cryptocurrencies, which are recorded on a blockchain, web3 projects assign and track points awarded to users. This means that any activity involving these points is recorded off the blockchain. They also lack inherent value and cannot be traded like conventional cryptocurrencies.

However, point holders can redeem their accumulated points for several rewards, including discounts, buying other products, or enjoying exclusive benefits and experiences. In addition, users can convert or transfer their points based on the loyalty program’s design.

What Are The Use Cases of Crypto Points?

Some of the ways crypto projects use the points system include:

• Gamification – Some web3 projects introduce the points systems to make interactions with their projects more engaging. This may include earning points by reaching certain milestones or completing quests. Users can utilize their earnings to unlock virtual rewards, scale leaderboards, or unlock badges.
• Incentivizing activity and engagement – Web3 projects may offer points to encourage actions or interactions that work in the best interest of the ecosystem or contribute to the project’s overall success. Such actions could include executing a swap, engaging with a specific dApp feature, providing liquidity, or referring new users.
• Bridge to tokens – Users can convert their accumulated points to the project’s native tokens depending on the project’s design. This encourages early adoption and user engagement, as well as ensures a fairer token distribution.
• Community building – Points can be used to encourage users to participate in community discussions, events, and initiatives, contributing to the project’s overall growth and sustainability.